Ammonia Prices Maintain Peak in Saudi, Strong Demand Pushes Up the Cost Curve

Anhydrous Ammonia Prices in Saudi have touched historic highs in December. FOB Jebel Ali offers spiked to $870 per MT levels in the week ending 17th December amidst tight global supplies and soaring European Natural Gas futures. Several middle eastern Ammonia producers who have been usually tapping Asian buyers have started looking from better netbacks from the European markets.

The global Ammonia market is on a bullish run since past two months on the back of tight spot availability and soaring Natural Gas prices. Some producers have also complained of non-availability of Ammonia stocks as they look for prioritizing contractual customers. As per market players, the Middle Eastern market is enjoying strong margins as European buyers are ready to pay higher for imports than producing themselves amidst tight feedstock availability.

Middle east is one of the leading producers of Ammonia in the world. Saudi Arabia is a leading producer of Ammonia in the region, accounting for more than 20% share in the world’s total Ammonia exports. The country’s Ammonia demand majorly comes from the fertilizer and industrial sectors. Saudi is a key Ammonia supplier to the Far East and South Asia with its significant importers being India, South Korea, Australia, China and Thailand. Apart from these, Saudi Arabia also exports a significant volume of its total Ammonia produce to Brazil.    

As per ChemAnalyst, Ammonia prices are expected to stay firm in the coming weeks with buyers looking for Saudi origin cargoes amidst tight supplies. Strong demand from the European and US markets and tight global supplies are likely to fetch strong margins to the Saudi Ammonia producers. High Natural Gas prices will further support price trajectory in the coming months as the industry heads for a winter season and the market will operate cautiously .